So where
exactly does Intel stand in the case? Stephen Labaton of The New York Times first broke the story
several weeks ago, stating that the FTC intended to examine "accusations
that Intel’s pricing is intended to maintain a near monopoly on the
microprocessor market."

The accuser obviously was AMD, who has served in recent years the role as the
only real rival to Intel in the microprocessor market. AMD has been the
eternal underdog, yet it has constantly complained that a majority of its
failures were due
to predatory behavior by Intel.

Little attention was paid to AMD's claims until 2003 when AMD finally offered
up an offering truly superior to what Intel had on the market -- the
Opteron. In Intel's Pentium 4 era of mediocrity, one would assume that
AMD with its promising processor would make great strides. However, a
combination of missed opportunities on AMD's part and aggressive rebates on Intel’s
part limited AMD's gains.

Now AMD has returned to another era of mediocrity. Its Barcelona chip was found to contain
important defects that have handicapped its potential. Basically, AMD has
been forced to concede the round to Intel as it waits to try to unveil its next
gen processor to compete with Intel's Nehalem
architecture.

The real question surrounding the FTC investigation is whether Intel, with its
rebates, broke U.S. anticompetition laws. One tough thing is that
antitrust laws are very loosely interpreted in the U.S., so one judge's views
on what amounts to illegal activity can differ greatly from another
judges.

In the U.S., past legal precedent has made it only illegal to rebate prices to
beneath cost of production to undercut competitors. This is a virtually
impossible violation to prove, as a company can easily argue that in offering
rebates it was upping its mass production, thus lowering its costs to an
acceptable level over time.

In the 1950s and 1960s almost any rebates and discounts were considered
predatory. Rulings were handed down that prevented such activity,
unfortunately such rulings also frequently hurt the consumer by preventing
legitimate rebates. In the 1970s, this state shifted thanks to the
Chicago School of antitrust theory, which argued that the burden of proof in
antitrust cases is significantly higher.

Since the shift, U.S. courts have only very rarely ruled against companies in
the most extreme of antitrust abuses, such as the 2000 ruling against
Microsoft. Robert E. Cooper, a lawyer at Gibson, Dunn & Crutcher, who
is representing Intel knows his history and is citing numerous pro-discount
rulings since 1970 that support Intel's case.

So are Intel's discounts predatory? Well they certainly aren't friendly,
if the allegations hold true. AMD alleges that Intel coerced Sony and
Toshiba to ditch AMD processors or face losses. This is how AMD alleges
it worked, claims given credence by many insiders. Intel approached the
manufacturers, whose sales were slipping and told them they could no longer
offer the generous discounts they had been handing out; but, they said if they
ditched AMD, they would still give the discount.

While it does not seem unfathomable that such an exchange occurred, it would be
tough to prove. Even if the FTC does find strong evidence for such a
deal, it is unclear whether it is illegal under U.S. law.

European law and other international courts, such as South Korea (which
recently handed down a large
$25.4 million fine against Intel) follow a post-Chicago School of antitrust
theory that is more wary of discounts. Thus it is very possible and in
fact likely that the FTC may find Intel innocent, while its contemporary, the
EC finds Intel guilty.

Such a confusing "split decision" is striking many in the legal and
business communities as wrong. Joe Nocera of The New York Times
writes, "The world economy really won’t function very well if
multinational companies have to dance between dueling regulators. Either we
need to adopt their standards, or they need to adopt ours. The Intel-A.M.D.
shows, if nothing else, how untenable the current state of play is in
antitrust."

One factor working against AMD -- it did make gains in the Opteron era, jumping
from 17 percent marketshare in March 2005 to 25 percent in December 2006.
And since, thanks likely to its missteps, the marketshare has fallen to about
20 percent.

The FTC investigation is still ongoing and may hold surprises. However,
barring major policy shifts, as likely as it seems that the EC will find Intel
in violation, it seems equally likely that the FTC will fine Intel
innocent. Such a process may amount to a hassle for Intel, but its
quickly amounting to a big headache for the global legal community which is
trying to come to grips with conflicting antitrust standards.

"Death Is Very Likely The Single Best Invention Of Life" -- Steve Jobs